India more competitive than China

The Global Competitiveness Report 2003-04 of the World Economic Forum (WEF) has ranked India several notches above China. In the Business Competitiveness Index (BCI), India's rank is 37 out of 102 countries as against China's 46.

The BCI is an index of a country's micro-fundamentals and focuses on the quality of the business environment as well as the sophistication of companies in the country.

Though Indian businessmen continue to compare the situation here unfavourably with China, India has traditionally scored higher than its neighbour on this index.

India is the world's top-ranked country when it comes to the presence of a large number of competitive firms. On the availability of engineers and scientists, it is third in the rankings, and No. 6 in terms of its policy on allowing foreign technology.

As far as the quality of management schools is concerned, it is No. 8. Access to credit, another favourite grouse of local businessmen, is seen as a strong point by the WEF, and India is ranked fourth in the world on this count.

On the quality of electricity supply, India is ranked a low 82nd, and on Internet usage at 79th. Similarly, on cellular use it is ranked 86th.

The impact of HIV/AIDS is seen as a big problem, and the country is ranked a poor 74th in this regard.

Not surprisingly, India's labour laws get it the 96th rank, very close to the bottom of the heap. Illegal political donations continue to remain a problem area, and India is ranked 94th on this count.

Though the government believes India has never reneged on international commitments, the WEF ranks the country 75th on "compliance with international agreements".

Both India and China, however, have slipped on the Growth Competitiveness Index (GCI) "" which measures the long-term sustainability of growth.

China's fall, though, has been sharper than India's. India has fallen two notches, from 54 to 56 and China from 38 to 44. While some part of this has been due to the introduction of 22 new countries, primarily from Africa, in the survey, the rankings have been adjusted for this.

The reason for the fall in India's case, is a very sharp deterioration in the Macroeconomic Environment Index ""India's ranking fell from 18 in 2002 to 52 in 2003.

While this can be partly explained by the introduction of new countries (no normalisation has been done for this by the WEF), the drop is clearly reflective of the worsening fiscal situation and falling investment levels over the past year. India is ranked 93rd on the deficit front.